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PM's call puts Aust-Indon ties on track

Gabrielle Dunlevy, Southeast Asia Correspondent

Indonesia's president has told Prime Minister Tony Abbott he hopes the two countries can heal the rift left by last year's spying scandal by August.

Susilo Bambang Yudhoyono's optimism came even as Australia sent a boatload of asylum seekers back to Indonesian territory with a new tactic that has added to Jakarta's concern over the border protection policy.

Dr Yuhoyono's office says he received a call from Mr Abbott on Tuesday afternoon, in which the prime minister conveyed his regret for having to miss a Bali forum, where the two were set to meet.

"President SBY stated that he could understand the reason for PM Abbott not attending in Bali regarding the discussion of budget in the parliament," the statement read.

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The leaders discussed progress in the negotiations for a new code of conduct after revelations in 2013 that Australia had tapped the president's phone, his office says.

"President SBY stated that it is his hope for a code of conduct to have been agreed on at least by August 2014."

According to the statement, the leaders also set tentative dates to meet face-to-face.

Dr Yudhoyono welcomed Mr Abbott's suggestion he visit in June, and the president was invited to view the Indonesia-Australia Centre in Melbourne either during his remaining time in office or after.

Mr Abbott's office confirmed the warm exchange.

"In a very cordial conversation, both leaders agreed on the importance of the bilateral relationship between Australia and Indonesia," a spokesman said.

"They committed to continue the progress that has been made to resolve current issues and to strengthen the relationship further."

When Mr Abbott postponed his Bali trip, it seemed to dash hopes of a breakthrough in the talks with Indonesia, which made the new code a precondition to lifting a temporary ban on people smuggling and other co-operation.

But Dr Yudhoyono, who has always taken pride in close relations with Australia, is likely motivated by his term ending this year.

The government said Mr Abbott was forced to remain in Australia due to the coming budget.

But it was believed the trip was canned because Australia was in the process of turning back asylum seekers.

Indonesian navy officers found a group of 20 stranded on an island on Sunday, and claim they were originally on two separate boats.

One boat carrying 18 asylum seekers - first reported as Indian and Nepalese, but now believed to be Iranian and Nepalese - was met by two Australian vessels near Ashmore Reef on Sunday.

Indonesian officials believe three more people - an Indonesian and two asylum seekers from either Nepal or Albania - were intercepted in a second boat and then added to the first.

"There were two boats," the spokesman for Indonesia's Co-ordinating Ministry for Politics, Law and Security, Agus Barnas, told AAP.

"The bigger one left from Makassar and the smaller one left from Rote Island. The smaller one then caught by Australia, then the boat was burnt."

Then, Mr Barnas said, the larger boat was intercepted and all were sent back in it.

Indonesia's Foreign Minister, Marty Natalegawa, said it was worrying.

"If confirmed, obviously this is a very serious development," he told reporters in Bali on Tuesday.

"As I've said from the very beginning, we are risking a slippery slope."

Further, it showed Operation Sovereign Borders wasn't working.

"The policy of his government to push, unilaterally forcing asylum seekers - which is threatening and violating their human rights - it's not yielding (success) because such efforts are still being conducted," Dr Natalegawa said.